Some, But Not All: How the North Carolina Planned Community Act affects Pre-1999 Planned Communities
December 10, 2024
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The North Carolina General Assembly finally concluded an extremely busy 2023-2024 legislative session on December 13, 2024.
Several bills introduced during this session had the potential to significantly impact the community association housing model. Throughout the session, the Community Associations Institute (CAI) North Carolina Legislative Action Committee (LAC) diligently tracked and advocated for the interests of community associations across the state.
Key Takeaways from the 2023-2024 Legislative Session
- Bills from the 2023-2024 session will not carry over into the 2025-2026 legislative session.
- The General Assembly officially adjourned for 2024 and will reconvene on January 8, 2025, to swear in legislators.
- During the 2024 half of the session, no bills affecting community associations were signed into law.
The Status of Community Association Legislation
Below is an update on the status of pieces of legislation from the 2024 half of the 2023-2024 North Carolina legislative session that are important to community association managers and board members of condominiums and planned communities.
HB 542 – Homeowners’ Association Revisions/Foreclosure Trustee Auctions.
Carried over from 2023, this bill originally intended to preclude associations from filing a lien for assessments until the delinquent account balance was at least $2,500. This bill, as originally written, would have made it more difficult for some associations to pay bills on time.
During the legislative process, several other amendments were added to HB 542 in 2023, including the imposition of 1-year time limit on management contracts, regulation of common elements, certain fees for preparing a lender questionnaire, hearing notices, and records access.
This bill ended up being sent to the full the Senate in June 2023 and was then sent back to the House in September 2023 with amendments clarifying the lender’s role in the foreclosure process and specifying the procedure for foreclosures stemming from unpaid fines. Ultimately, however, the House and Senate were not able to reach concurrence.
Status: Dead unless reintroduced in the 2025-2026 legislative session.
HB 311 – Community Association Oversight Division.
This bill sought to establish a Community Association Oversight Division, which would be part of the North Carolina Attorney General's office. This bill was converted into legislation to simply authorize the study of the regulation of homeowners associations. Ultimately, this resulted in the formation of the House Select Committee on Homeowners Associations.
Status: Converted into a resolution authorizing the House Select Committee on Homeowners Associations (See HB 959 below)
HB 959 Various Changes to Homeowners' Associations Laws.
This bill was introduced during the 2024 portion of the legislative session and contained the recommendations of the House Select Committee on Homeowners Associations. The House Select Committee was formed via the conversion of HB 311, to, among other things, study the options for regulation and enforcement of homeowners associations. The House Select Committee met sporadically in the interim between January and April of 2024. After comments from stakeholders, including participation from the North Carolina LAC, the House Select Committee voted on final recommendations, which were introduced during the session as HB 959.
This bill mandated prelitigation mediation of disputes between associations and homeowners and required the Department of Justice to collect data on complaints against associations received and report that data to a select committee. In addition, the bill required the affirmative approval of a majority of all owners in each community association to approve a budget or assessment increase of more than 10% and prevent further increases over 5% for the rest of the fiscal year. The bill also set new thresholds on when a community association could initiate foreclosure proceedings. Providing that an owner must be at least delinquent in the payment of 6 months' worth of unpaid assessments or $2,500, whichever is greater, and all associations would have to first offer a repayment plan before foreclosing on a lien.
Status: Died in Committee.
HB 551/SB 553 – Landlord-Tenant and HOA Changes.
This legislation was carried over from 2023. This bill included a provision stipulating that any amendments to a community association’s declaration would only impact lot owners whose lots are conveyed or transferred after the amendment's effective date. This provision would have potentially nullified established development plans and made it a nightmare to enforce the provisions of the declaration.
The House version of the bill passed into the Senate in April 2023, where it then stopped moving.
Status: Died in the Senate.
SB 376 – Expanding Members’ Access to HOA Records.
The proposed bill aims to expand the rights of owners to review all contracts entered into by their association, including management contracts. The bill passed through the Senate and was sent to the House in May 2023, where it then stopped moving.
Status: Died in the House.
SB 312 – Changes to Liens and Foreclosures by HOAs.
This bill removed the authority of community associations to foreclose on a claim of lien for unpaid assessments. As associations offer facilities and services to all residents, including those who do not pay their fair share, this legislation would have rendered associations to be nothing more than paper tigers. This bill was ultimately never heard in Committee.
Status: Died in Committee.
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